Dr. P.V. Viswanath

 

pviswanath@pace.edu

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  Courses/FIN American Capital Markets  
   
 
 
 

Important Terms and Concepts

Based on Larry Harris, Trading and Exchanges: Market Microstructure for Practitioners, Oxford University Press, 2003.

 

  
 
 
 

 

Chap. 1: I

Terms

  • multina

 

Short Questions

  • What

 

Chap. 2: The

Terms

  • e

 

Short Questions

  • What

 

Chap. 3:

Terms

  • international m

 

 

Short Questions

  • What

 

 

Chap. 4:

Terms

 

Short Questions

  • What

 

Chap. 7: Brokers

Terms

  • Payments for order flow: These are payments that dealers make to brokers to obtain orders from their clients

 

Short Questions

  • Why do dealers make payments for order flow?
    Ans: There are several reasons for a dealer to want order flow. The main reason is that order flow is precisely the stock in trade of the dealer, sinc ewhat a dealer does is to sell/buy securities and in order to make money, he needs customers who desire to trade with him. (check out p. 516 ff.)

 

Chap. 9: Swaps and Interest Rate Derivatives

Terms

  • inter

 

Short Questions

  • What

 

Chap. 10: Informed Traders and Market Efficiency

Terms

  • value traders
  • efficient markets
  • Weak-form market efficiency
  • Semi-strong form market efficiency
  • Strong form market efficiency

Short Questions

  • Why is it important to have prices that are informative?
  • What are the social costs of restrictions on insider trading?

 

Chap. 12:

Terms

  • investment ba

Short Questions

  • What a

 

Chap. 13: The

Terms

  • Price Improvement: this refers to the phenomenon of an order receiving a price better than a quoted price.
  • Payment for Order Flow

 

Short Questions

  • What are some of the

Chap. 14: Bid/Ask Spreads

Terms

  • Trade-Through Rule:
  • Price Matching:
  • Preferencing

 

Short Questions

  • Why are time precedence rules less important with decimalization?